Banks, telcos partner for greater rural reach
India's top lenders State Bank of India (SBI) and ICICI Bank on Wednesday announced separate tie-ups with the country's leading telecom operators to make banking services available through mobile phones, mainly targeting millions in rural areas who do not have access to banks.
January 12, 2011 / 21:01 IST
India's top lenders State Bank of India (SBI) and ICICI Bank on Wednesday announced separate tie-ups with the country's leading telecom operators to make banking services available through mobile phones, mainly targeting millions in rural areas who do not have access to banks.
Bharti Airtel, the country's top mobile phone operator, will team up with top Indian lender SBI that would use the mobile firm's 1.5 mn retailers as "customer service points" for opening new bank accounts and for other banking products and services.India's No. 3 mobile carrier Vodafone Essar and second-largest lender ICICI Bank have also entered into a similar pact.The Reserve Bank of India has allowed banks to appoint companies as "business correspondents" to expand their reach, as part of its financial inclusion programme.India wants to use the fast-growing mobile phones as an instrument to expand banking services to remote areas for greater accessibility to nearly 70% of its 1.2 bn people who live in rural areas.Sixty percent of India's population now have mobile phones, and the sector is adding on an average about 18 mn connections a month to be the world's fastest-growing mobile market. Smaller towns and villages have been the growth drivers.About 209 mn rural mobile subscribers far outstrip bank account holders in rural areas, the Telecom Regulatory Authority said last October in an industry consultation paper on delivery of banking services using mobile phones.Bharti Airtel and State Bank of India will jointly invest Rs 100 crore (USD 22 mn) initially in the joint venture for mobile-based banking, SBI Chairman OP Bhatt told reporters at a news conference on Wednesday.The joint venture would help SBI, which has more than 13,000 branches, to expand its reach into rural areas, whereas Bharti Airtel will benefit from "stickiness" of customers as they get more services on mobile phones, Bharti Airtel Chairman Sunil Mittal said at the same news conference.ICICI Bank Chief Executive Chanda Kochhar said in a statement the partnership with Vodafone would help the bank in "deepening its base" within the country.Bharti Airtel had nearly 150 mn mobile customers at end-November, while Vodafone Essar had more than 121 mn, in a market of more than 700 mn mobile users. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
